Monday, May 5, 2008

It looks like homes built after 2000 are disproportionately impacted by rising vacancies, yielding rates of over 10% versus 2.9% for all homes vacant but available for rent. From a New York Times story (hat tip to Patrick.net):

The Census Bureau reported that 2.9 percent of homes intended for owner occupancy were vacant at the end of the first quarter. That figure had begun to rise even during the housing boom, a little-noticed byproduct of the aggressive construction of homes encouraged by easy credit. Before 2006, that figure had never exceeded 2 percent.

Houses can be rented out, of course, even if they had been intended to be lived in by the owner, but the rental market also has high vacancies now. Over all, 10.1 percent of homes intended for rental are vacant. That rate is a little below the record level hit in 2004, but it is still higher than it ever was before the construction boom of this decade.

The figures include both single-family homes and apartments. In rentals, the vacancy rates are almost equal for homes and apartments. But in the owner market, the vacancies are much more concentrated in condominiums. In buildings with five to nine units — like many garden apartment buildings — the condominium vacancy rate is an unprecedented 15.2 percent. That is up from 12.2 percent at the end of 2007. Before 2006, that rate had never been as high as 10 percent.

Even worse news for those who bought new homes or apartments in recent years is that the vacancy rates in those properties are far higher than they are in older buildings. For homes and condominiums built after March 2000, the vacancy rate for homes intended for owner occupancy is 10.2 percent, up from 8.8 percent at the end of 2007.

For rental units, the figures are even greater. There, 25.2 percent — or one of every four — of housing units built since the spring of 2000 are vacant.

Vacancy rates vary by market, of course. At the end of 2007, areas with the highest vacancy rates in housing intended for owner occupancy fell into two categories: Rust Belt areas like Detroit, Cleveland and Akron, Ohio, and former boom areas like Orlando and Tampa in Florida, and Las Vegas. Although home prices have fallen sharply in parts of California, only the Sacramento area shows high vacancy levels...

Residential construction’s share of the economy fell to 3.8 percent in the first quarter, down from a peak of 6.3 percent in the first quarter of 2006, when home prices were nearing their highs. But that figure is not far below the average figure for the 1990s, 4.1 percent, and well above the low of 3.3 percent, reached in the first quarter of 1991 after the last major housing market setback.